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Thread: Semi Capex Forecast to Exceed $100B for the First Time in 2018

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    Semi Capex Forecast to Exceed $100B for the First Time in 2018

    IC Insights raises its full-year spending growth forecast for this year from 8% to 14%.

    IC Insights recently released its May Update to the 2018 McClean Report. This Update included a look at the top-25 1Q18 semiconductor suppliers, a discussion of the 1Q18 IC industry market results, and an update of the 2018 capital spending forecast by company.

    Overall, the capital spending story for 2018 is becoming much more positive as compared with the forecast presented in IC Insights’ March Update to The McClean Report 2018 (MR18). In the March Update, IC Insights forecast an 8% increase in semiconductor industry capital spending for this year. However, as shown in Figure 1, IC Insights has raised its expectations for 2018 capital spending by six percentage points to a 14% increase. If this increase occurs, it would be the first time that semiconductor industry capital outlays exceeded $100 billion. The worldwide 2018 capital spending forecast figure is 53% higher than the spending just two years earlier in 2016.

    Although Samsung says it still does not have a full-year capital spending forecast for this year it did say it will spend “less” in semiconductor capital outlays in 2018 as compared to 2017, when it spent $24.2 billion. However, as of 1Q18, with regard to its capex, its “foot is still on the gas!” Samsung spent $6.72 billion in capex for its semiconductor division in 1Q18, slightly higher than the average of the previous three quarters. This figure is almost 4x the amount the company spent just two years earlier in 1Q16! Over the past four quarters, Samsung has spent an incredible $26.6 billion in capital outlays for its semiconductor group. Wow!

    IC Insights has estimated Samsung’s semiconductor group capital spending will be $20.0 billion this year, $4.2 billion less than it spent in 2017. However, given the strong start to its spending this year, it appears there is currently more upside than downside potential to this forecast.

    With the DRAM and NAND flash memory markets still very strong, SK Hynix is expected to ramp up its capital spending this year to $11.5 billion, 42% greater than the $8.1 billion it spent in 2017. The increased spending by SK Hynix this year will primarily focus on bringing on-line two large memory fabs—M15, a 3D NAND flash fab in Cheongju, South Korea and its expansion of its huge DRAM fab in Wuxi, China. The Cheongju fab is being pushed to open before the end of this year. The Wuxi fab is also targeted to open by the end of this year, a few months earlier than its original planned start date of early 2019.

    Semi Capex Forecast to Exceed 0B for the First Time in 2018-semi-capex-2018.jpg


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    Its truly unbelievable to see the magnitude of Samsung's capex investments to further strengthen its dominant position in DRAM and NAND businesses. Samsung's competitors will feel the pressure from the enormous capacity being brought up. Moreover Samsung is the only DRAM vendor which is aggressively moving to 7nm EUV. I think Samsung will further extend their dominance in DRAM and NAND markets by 2020.

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    Quote Originally Posted by raghu78 View Post
    Its truly unbelievable to see the magnitude of Samsung's capex investments to further strengthen its dominant position in DRAM and NAND businesses. Samsung's competitors will feel the pressure from the enormous capacity being brought up. Moreover Samsung is the only DRAM vendor which is aggressively moving to 7nm EUV. I think Samsung will further extend their dominance in DRAM and NAND markets by 2020.
    Agreed. Samsung's brute force culture is by far superior to the other memory makers who are so focused on yield/margins they are being lapped. Unfortunately that culture does not work as well in the foundry business.

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    What does this mean for Micron? Does their addition of 1000 patents a year provide an IP moat strong enough to protect it from a prolific spender? Any thoughts on Samsung and advanced memories like 3Dxpoing and Crossbar? Any thoughts on how this will effect TSM? I feel TSM will be protected by its technology and the trust of its customers combined with the stickiness of its platform.

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    Last edited by Arthur Hanson; 05-23-2018 at 11:09 AM.
     

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